Tweet 4 Canada

Posted by Steve Fissel236sc on March 01, 2016

Liberal's changes to CETA highlight flaws with the TPP

Chrystia Freeland, Canada’s International Trade Minister, yesterday unveiled the final legal draft of the Canada – EU Trade Agreement. While CETA is still awaiting translation, Freeland indicated that she hopes the agreement will come into force in 2017. The lengthy delay in arriving at a final legal draft arose from ongoing European opposition to investor-state dispute settlement provisions that many fear may limit governmental regulatory power and lead to expensive corporate lawsuits. The CETA text unveiled yesterday features some notable changes to the ISDS rules, with Canada largely acquiescing to European demands.

The ISDS changes raise in CETA at least two points that are relevant for TPP purposes. First, claims that completed trade agreements are non-negotiable and cannot be changed simply isn’t true. CETA was completed years ago, yet political demands for changes to the ISDS rules led all parties to go back to the bargaining table to work out a new system. While Freeland called the changes “modifications”, the reality is that a major aspect of the deal was re-worked in face of European protests. If elements of CETA can be reworked, there may be ways to re-do aspects of the TPP.

Second, CETA and the TPP are no longer consistent with respect to investor-state dispute settlement. The Trouble with the TPP series will spend the next several posts examining the ISDS issue, but for the moment it is notable that Freeland has characterized CETA as a “gold plated” trade deal, arguing that it best reflects Canadian interests. Moreover, TPP proponents have also welcomed the CETA changes, noting that the earlier version raised legitimacy concerns. For example, Lawrence Herman told the Globe and Mail:

I’ve thought for some time that it’s not acceptable for decisions on matters of national policy to be decided by ad hoc arbitrators, where there was no avenue of appeal.

There is room to debate whether the CETA model solves ISDS concerns (many groups argue it does not), but there is no doubt that the TPP ISDS rules fall well short of even the CETA standard. This raises an important question of how the Canadian government can support TPP ISDS rules when it is now on record as supporting significant changes to those rules in the CETA context.